Welcome to Dollar Scholar, a personal finance newsletter written by a 27-year-old who’s still figuring it out: me.
Every week, I talk to experts about a money question I have, whether that’s “What if I don't have a 401(k)? or “How many credit cards do I need?” As I learn, I share simple ways to improve your financial life… and post cute dog photos.
This is (part of) the 35th issue. Check it out below, then subscribe to get future editions of Dollar Scholar every Wednesday.
Today, I’m trying to look on the bright side. This coronavirus isolation thing sucks, but it’s not all bad.
I basically never have to get out of sweatpants, so I’m always dressed for a nap. I’ve been going for walks outside, which has allowed me to discover a dog park near my house I’d never seen before. I’m letting myself eat comfort foods without any guilt, and my friends figured out how to play the Jackbox game Drawful over Google Hangouts.
Flattening the curve has its perks. And I’d be remiss in my esteemed role as Dollar Scholar if I didn’t point out that one of them is how I now have endless time to take care of my finances.
TBH, there’s a lot of money stuff I’ve been putting off because it’s difficult/tedious/annoying. I bet you have some tasks you’ve been avoiding, too. So I asked experts: What financial chores can I knock out during my coronavirus quarantine?
Lacey Cobb, a CFP and director at Personal Capital, and Joy Liu, a level-two trainer at the Financial Gym, helped me create the ultimate to-do list. Let’s jump in.
1. Check my emergency fund.
Layoffs are already starting in some industries, and medical costs are extra scary right now, so having an emergency fund in place is super important. Cobb told me I can save however much I want, but a good guideline is three to six months’ worth of expenses. If I don’t have that money put away now, my first goal should be to devise a plan on how to do so immediately.
2. Review my spending.
Liu said to download my credit card transaction history and gather my bank statements for the past three months. Then I should take a hard look at them, identifying needs, wants and wasteful spending decisions.
“No judgment or anything — it’s just observing the behavior,” Liu adds. From there, I should decide whether there are any habits I should change, subscriptions I should cancel, et cetera.
3. Go shopping (around).
For fixed bills like car insurance, Liu said it’s a good idea to shop around and/or ask for new quotes from my provider every once in a while because they tend to change rapidly. For services like internet or phone, I should do some research on cheaper options and consider jumping ship.
Need recommendations for car insurance companies? Read Money's recent article The Best Car Insurance Companies of 2020.
4. Set up a high-yield savings account.
The rates offered by online banks won’t be quite as high as they once were due to recent Fed activity, but this is still a great time to create a high-yield savings account if I haven’t already. Money likes SFGI Direct (1.86% APY) for high-yield savings accounts and Ally (1.5% APY) for an online bank, so those are probably good places to start.
5. Optimize debt repayment.
Liu said this is a golden opportunity to analyze any high-interest consumer debt I have. I should move it to a 0% interest credit card or consolidate it with a personal loan if I have a good credit score (680 or above). If my score is lower than that, Liu advised me to call my card company and negotiate a rate reduction.
“Given the current climate, they’re going to be more likely to do that [than normal], especially with interest rates dropping and the pandemic happening,” she says.
6. Pull a credit report.
Americans are entitled to a free credit report every 12 months from each of the three main credit bureaus. In the interest of not blowing them all at once, Liu recommended I only pull one using annualcreditreport.com. Once I’ve got it, I should look over the report for any fraudulent activity or mistakes.
7. Do my taxes.
It’s easy to forget when I’m watching CNN and worrying 24/7, but I'm still on the hook for income taxes. The IRS pushed Tax Day back to July 15, but my state deadline could vary.
“It would make sense to file sooner rather than later if you're going to be getting a refund,” Cobb says.
8. Consider the afterlife.
Cobb told me to get everyone in the family on the same page about money, whereas Liu said to organize my documents and put together a will, power of attorney and health care proxy. At the very least, I should review my beneficiaries on my retirement accounts to make sure they’re up-to-date.
Bottom line? I can’t complain about being bored in isolation any more, because there’s a ton of financial stuff to get done! Taking care of business might even improve my mood.
“The world feels pretty chaotic right now, and it’s human nature that we feel better by doing something,” Cobb says. “It gives us a sense of control.”
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